The ABC Ltd. is considering the replacement of its old machine. The particulars relating to two...

Transcribed Image Text:

The ABC Ltd. is considering the replacement of its old machine. The particulars relating to two alternative proposals are given below: Cost per unit: Material Labor Overhead Total Fixed cost Sales price per unit is Tk. 80 Machine A Tk. 30 18 12 40,000 Machine B Tk. 30 15 10 80,000 Calculate the break-even production in each case. Which machine should be bought if 5000 units are to be produced? ) Which machine is profitable for production of 10,000 units in a year? iv) Calculate the volume of production at which the machine would be equality profitable. The ABC Ltd. is considering the replacement of its old machine. The particulars relating to two alternative proposals are given below: Cost per unit: Material Labor Overhead Total Fixed cost Sales price per unit is Tk. 80 Machine A Tk. 30 18 12 40,000 Machine B Tk. 30 15 10 80,000 Calculate the break-even production in each case. Which machine should be bought if 5000 units are to be produced? ) Which machine is profitable for production of 10,000 units in a year? iv) Calculate the volume of production at which the machine would be equality profitable.

Answer rating: 100% (QA)

To calculate the breakeven production for each machine we need to determine the number of units required to cover the total fixed costs For Machine A ... View the full answer